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The Week Ahead: Among Fed's words ... confidence?

It's easy to write that investors should pay attention to the meeting of the Federal Open Market Committee of the Federal Reserve in the week ahead. What's tough for investors is staying focused on the long-term potential of the American economy while acknowledging the Fed's affinity for locution.

The central bank's monetary policy setting group has built a linguistic legacy as it uses its post-meeting statements to try and guide investor expectations while not giving any specific information. The Fed has encouraged this communication since the mid-90s when it began issuing paragraphs describing its actions.

By its nature, the bank's decisions are opaque. It has taken steps to increase transparency while never fully opening itself up to public scrutiny. It would like its actions to speak

louder than its words. As a result, its words are scrutinized and dissected for any possible hint of action.

Words are what investors will be watching for after its two-day meeting wrapping up Wednesday. The Federal Reserve has consistently pledged patience before "beginning to normalize" interest rates. That's central banker-speak for raising interest rates. As job growth has continued the end of the more-than-6-year-old zero percent interest rate policy nears. That prospect has led to a stronger U.S. dollar and more volatility for U.S. stocks.

Lost in this noise is the basis for any future Federal Reserve decision to move from zero: confidence in a strengthening American economy.

Tom Hudson, financial journalist, hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is the vice president of news. Follow him on Twitter @HudsonsView.

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